[Click eStock] "Cheongdam Global, Strong Performance Growth Expected in Both Core Business and New Ventures"

Cape Investment & Securities Report

[Asia Economy Reporter Minji Lee] Cape Investment & Securities forecasted on the 31st that Cheongdam Global is highly attractive for investment, expecting steep performance growth in both its core business and new ventures.

Cheongdam Global is a big data-based lifestyle specialized distributor supplying premium consumer goods (cosmetics, infant products, health supplements, etc.) primarily to China's Amazon JD.COM and Alibaba. The global cosmetics sales account for 85% of its revenue.

The company is a distributor that has secured solid competitiveness in the Chinese market, where many domestic companies have struggled. The source of its competitiveness lies in a strong local network based on core personnel with deep understanding of China and access to comprehensive category sales data shared only with first-tier vendors of JD.COM and Alibaba.

Seonjae Heo, a researcher at Cape Investment & Securities, said, “Not only the company's main business of product distribution but also significant growth momentum is prepared in recently promoted businesses such as the filler and Botox business (Biovizju) and the self-operated premium cosmetic direct purchase platform (Vaishuco), so performance growth is expected.”

In the lifestyle distribution sector, performance growth is expected to continue through expanding client companies, broadening categories such as electronics and fashion, and increasing vendors. The transaction volume and sales of the company's main client, JD.COM, are expected to grow at an average annual rate of over 15%. Researcher Heo stated, “Since the actual order volume coming into the company is rapidly increasing, the growth potential toward JD.COM remains very large,” adding, “This sufficiently offsets the risk of high dependence on China.”

Biovizju (76% stake), which operates the new HA filler and Botox business, is expected to achieve steep production and sales volume expansion this year through the establishment of its own production facilities. As of April this year, cumulative sales reached 9.3 billion KRW, already surpassing last year's annual sales of 8.7 billion KRW, so this year's sales are estimated to reach 31.7 billion KRW, a growth of approximately 263% compared to the previous year. Supported by rapidly increasing order volume, the company's production capacity is planned to expand from the current 2.4 million units (worth 24 billion KRW) to 6 million units (worth 60 billion KRW) in the future.

This year's expected performance is sales of 283.4 billion KRW and operating profit of 23 billion KRW, representing increases of 96.3% and 137.8%, respectively, compared to the same period last year. Due to weak demand forecast results conducted on the 17th and 18th of last month, the public offering price was set near the lower end of the band at 6,000 KRW.

Researcher Heo said, “Although the results were poor due to stock market downturn and deteriorating investment sentiment, the price-to-earnings ratio (PER) based on this year's expected performance dropped to around 8 times, highlighting the valuation attractiveness.”